Earnings call transcript: Plymouth Industrial Q2 2025 misses EPS forecast

Plymouth Industrial REIT reported a disappointing second quarter for 2025, missing its earnings per share (EPS) forecast by a significant margin. The company posted an EPS of -$0.14, falling short of the expected $0.02, resulting in an EPS surprise of -800%. Despite this shortfall, revenue slightly exceeded expectations at $47.2 million compared to the forecasted $46.46 million. The market reacted positively in premarket trading, with Plymouth’s stock rising by 14.04% to $16.25. According to InvestingPro analysis, Plymouth maintains a "GOOD" overall financial health score, though analysts anticipate challenges with profitability this year. The stock currently appears undervalued based on InvestingPro’s Fair Value model.

Key Takeaways

• Plymouth Industrial REIT missed EPS expectations by -800%.
• Revenue slightly surpassed forecasts, showing a 1.59% positive surprise.
• Premarket trading showed a 14.04% increase in stock price.
• Strong rent growth and renewal activity were highlighted in the earnings call.
• The company reaffirmed its full-year core FFO guidance for 2025.

Company Performance

Plymouth Industrial REIT’s performance in Q2 2025 was mixed, with notable shortcomings in earnings but slight outperformance in revenue. The company has been focusing on growth through leasing and acquisitions, with over 1.4 million square feet leased in Q2 and the acquisition of an Ohio Light Industrial portfolio. The firm is also addressing lease expirations and maintaining high occupancy rates, which are 400 basis points above the broader market. InvestingPro data shows the company has maintained a strong dividend track record, raising dividends for three consecutive years, with a current yield of 6.74%. For deeper insights into Plymouth’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Financial Highlights

• Revenue: $47.2 million, slightly above forecast and reflecting a positive surprise of 1.59%.
• Earnings per share: -$0.14, significantly below the forecast of $0.02.
• Same Store NOI grew 4.1% on a cash basis.
• Ended the quarter with $285 million available on an unsecured credit line.

Earnings vs. Forecast

Plymouth Industrial REIT’s actual EPS of -$0.14 was well below the forecasted $0.02, resulting in an EPS surprise of -800%. This is a considerable miss compared to previous quarters, where the company had been closer to meeting expectations. However, the revenue of $47.2 million slightly exceeded the forecast by 1.59%.

Market Reaction

Despite the earnings miss, Plymouth Industrial REIT’s stock saw a significant rise in premarket trading, climbing 14.04% to $16.25. This movement may reflect investor optimism about the company’s revenue performance and reaffirmed guidance. The stock remains within its 52-week range of $12.7 to $24.7. InvestingPro technical analysis indicates the stock is currently in oversold territory based on RSI, while analyst targets suggest an average upside potential of 26%. The stock trades at a P/E ratio of 4.71, indicating a relatively low earnings multiple compared to peers.

Outlook & Guidance

The company reaffirmed its full-year core FFO guidance for 2025, signaling confidence in its financial health despite the Q2 earnings miss. Plymouth has an acquisition pipeline of $750 million, double the level from Q1, and expects a stronger second half of 2025. According to InvestingPro forecasts, revenue is expected to grow by 3% in FY2025, though net income may face some pressure. The company maintains a solid gross profit margin of 66.88% and has demonstrated strong historical revenue growth with a 5-year CAGR of 21%.

Executive Commentary

• Jim Connolly, EVP Asset Management, noted, "Manufacturing firms are trying to solidify their space long term."
• CEO Jeff Witherell stated, "We will deploy that $90 million... similar to what you’ve seen in the past."
• Connolly also mentioned, "Our market rents have been growing maybe a little off pace from previous years."

Risks and Challenges

• Potential market saturation and flattening rent growth could impact future revenue.
• Macroeconomic pressures may affect tenant demand and lease renewals.
• The company’s high debt levels, with 74.5% fixed through interest rate swaps, could pose financial risks if interest rates rise.

Q&A

During the earnings call, analysts focused on lease negotiations for properties in Memphis and St. Louis. The management expressed confidence in tenant retention and lease renewals. Additionally, they are exploring build-to-suit opportunities in Cincinnati and Memphis, indicating potential future growth avenues.

Full transcript - Plymouth Industrial REIT Inc (PLYM) Q2 2025:

Conference Operator: Good day and welcome to the Plymouth Industrial REIT Second Quarter twenty twenty five Earnings Conference Call. All participants will be in listen only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Ethan Farris, Investor Relations.

Please go ahead.

Ethan Farris, Investor Relations, Plymouth Industrial REIT: Thank you. Good morning. Welcome to the Plymouth Industrial REIT conference call to review the company’s results for the 2025. Yesterday afternoon, we issued our earnings release and posted a copy of our prepared commentary in the supplemental deck on the Quarterly Results section of our Investor Relations page. In addition to these earnings documents, a copy of our 10 Q can be found on the SEC filings page of the IR site.

Our supplemental deck includes our full year 2025 guidance assumptions, detailed information on our operations, portfolio and balance sheet and definitions of non GAAP measures and reconciliations to the most comparable GAAP measures. We will reference this information in our remarks. With me today is Jeff Witherell, Chairman and Chief Executive Officer Anthony Saladino, President and Chief Financial Officer and Jim Connolly, Executive Vice President of Asset Management. I would like to point everyone to our forward looking statements on Page three of our supplemental presentation and encourage you to read them carefully. They apply to the statements made in this call, our press release, our prepared commentary and in our supplemental financial information.

I’ll now turn the call over to Jeff.

Jeff Witherell, Chairman and Chief Executive Officer, Plymouth Industrial REIT: Thanks, Ethan. Good morning and thank you for joining us today. I hope that everyone had a chance to review the commentary and supplemental information we posted last night. First, I’ll highlight a few key points from the quarter before we move to Q and A. The 2025 was another solid period of execution for Plymouth marked by strong leasing activity, continued deployment into high quality acquisitions and further progress on our capital allocation priorities.

We commenced over 1,400,000.0 square feet of leasing in the quarter, bringing our year to date total to nearly 6,000,000 square feet, addressing nearly 70% of our 2025 lease expirations and driving blended cash rent spreads of over 13%. Leasing activity remains broad based, but we’re seeing particular strength among light manufacturing users seeking long term space commitments in our core markets. We closed on $2.00 $4,000,000 of acquisitions in Q2, including the Ohio Light Industrial portfolio, one of the largest transactions in our company’s history. These fully leased assets were acquired at an initial yield of 6.7% with in place rents approximately 22% below market in a weighted average remaining lease term of two point six years, offering embedded rent growth and long term upside. We also continued to execute on our share repurchase program acquiring over 805,000 shares in the quarter and another 225,000 shares post quarter end.

Operationally, our portfolio continues to perform well. Same store NOI grew 4.1% on a cash basis, supported by strong rent growth and renewal activity. Occupancy increased sequentially. We expect to end the year with same store occupancy near 96.5%, driven by ongoing leasing success in our larger spaces and continued tenant retention across the portfolio. From a strategic standpoint, our focus remains on acquiring and operating smaller footprint infill industrial properties in dense supply constrained submarkets.

These assets continue to outperform bulk product with occupancy rates over 400 basis points higher than broader market averages. With development concentrated in larger buildings, our portfolio is well insulated from new supply and positioned to capture strong rent growth. We ended the quarter with over two eighty five million dollars of availability on our unsecured credit line and 74.5% of our debt fixed including through interest rate swaps. With no debt maturities in 2025, we maintain strong balance sheet flexibility and expect to return to our targeted leverage range in the near term as newly acquired assets stabilize. We are reaffirming our full year 2025 core FFO guidance and continue to expect a stronger second half of the year supported by continued lease up activity, embedded rent growth and the full contribution from recently acquired assets.

Thank you for your continued support and interest in Plymouth. I look forward to providing additional updates as we execute on our strategy. With that, I’ll turn it over to the operator for questions.

Conference Operator: Thank you. We will now begin our question and answer session. And the first question will come from Todd Thomas from KeyBanc Capital Markets. Please go ahead.

Todd Thomas, Analyst, KeyBanc Capital Markets: Sounds like you’re seeing a little bit of an increase in leasing demand more recently. Appreciate some of the detail on those the renewal and expansion opportunities underway. Can you provide us with an update on the year end expiration in Memphis? And then with regard to the 624,000 square foot August expiration in St. Louis, can you just discuss your confidence in that renewal materializing here?

Is there any risk of that not happening at this point?

Jim Connolly, Executive Vice President of Asset Management, Plymouth Industrial REIT: Yes. On the Memphis exploration, we’re currently working with them on a two year extension. So details will be coming shortly. And as far as the St. Louis 625,000 square foot that is in DocuSign.

They have all of their client contracts, signatures approved and we just expect it any day. These signature processes with these international companies are quite extensive and take a while, but there’s no chance it’s not happening.

Todd Thomas, Analyst, KeyBanc Capital Markets: Okay. That’s helpful. And then can you also talk about some early indications around 2026 and your expectations for tenant retention? Any insight around what that might look like as you gain a little more visibility around ’6 and begin working through expirations?

Jim Connolly, Executive Vice President of Asset Management, Plymouth Industrial REIT: Yes. ’26 is probably it looks like it’s a little light so far, but there’s two big leases that are currently in the signature cycle. Again, both international companies and they take a while to sign. That’s going to be 370,000 square feet that’s going to be signed shortly. As far as retention, I mean, we’re seeing quite a bit of that.

We’re getting people wanting to address their expirations early and we’re working with several companies right now on these extensions.

Todd Thomas, Analyst, KeyBanc Capital Markets: Okay. And if I could just ask one question around acquisitions. How should we think about additional acquisitions in the second half as you look to completely redeploy the Sixth Street capital proceeds in the context of additional stock buybacks. Wasn’t clear if there is more to do in terms of acquisitions in your view just in light of where capital costs are today or if anything has changed?

Anthony Saladino, President and Chief Financial Officer, Plymouth Industrial REIT: Yes, Tom, this is Anthony. So just contextualizing that a bit. Pipeline currently stands at about $750,000,000 which is double the level we saw in the first quarter. All of the contemplated transactions are located in markets where we already have an operating presence, which perfectly aligns with our strategy of expanding within the existing metros. I’d say notably today we’re we are fully engaged on a large off market portfolio.

And if successful this opportunity would bring us beyond the midpoint of our full year acquisition volume. I think as we think about guidance and our previously announced deployment, we probably have around $91,000,000 left to go. And so looking ahead, we would expect to potentially supplement acquisition and growth activity through a combination of balance sheet capacity, selective term financing and capital recycling initiatives.

Todd Thomas, Analyst, KeyBanc Capital Markets: Okay. All right. Thank you.

Jeff Witherell, Chairman and Chief Executive Officer, Plymouth Industrial REIT: Thanks.

Conference Operator: The next question is from Eric Borden from BMO Capital Markets. Please go ahead.

Eric Borden, Analyst, BMO Capital Markets: Hey, good morning everyone. In your prepared commentary, you mentioned that 80% of the remaining 25 lease expirations were in active discussion. I was just hoping if you could provide a little bit more context as it relates to, is there a portion of the expirations that are under LOI? Are you currently trading papers with a portion of it? Or and is there a portion still kind of kicking the tires around those deals?

Anthony Saladino, President and Chief Financial Officer, Plymouth Industrial REIT: Eric, I think you were referring to what we previously disclosed as about 1,600,000 square feet of speculative leasing in same store. Is that correct?

Eric Borden, Analyst, BMO Capital Markets: It’s the 847,000 square feet of remaining that of expirations in the prepared commentary.

Anthony Saladino, President and Chief Financial Officer, Plymouth Industrial REIT: Understood. Jim could speak to that.

Jim Connolly, Executive Vice President of Asset Management, Plymouth Industrial REIT: Yes. I don’t have broken down exactly the way you laid it out, but we’re going back and forth with on all these deals probably that’s getting out Kyodis. And the rest of it is probably the ROIs are probably 40%. Active conversations are about 50% and just day to day communications with tenants 10%. So I mean they’re in active discussions.

They’re in process and they’re going to get done.

Eric Borden, Analyst, BMO Capital Markets: Okay. And is there just any risk that those get pushed out into 2026 just given the macro uncertainty and discussions with potentially just taking longer today?

Jim Connolly, Executive Vice President of Asset Management, Plymouth Industrial REIT: There’s always a chance that something might slip a little bit, but I don’t think that there’s much risk in what we have left for this year.

Conference Operator: Okay.

Eric Borden, Analyst, BMO Capital Markets: And then on the Ohio portfolio acquisition, I understand that there’s a little bit of a shorter wall, but a pretty sizable mark to market opportunity. Just curious what portion of that portfolio lease rolls this year? And are you currently in active discussions with the remainder of the portfolio? And is there any sense of tenants staying or leaving today?

Anthony Saladino, President and Chief Financial Officer, Plymouth Industrial REIT: So with respect to OhioLight, you’re right that the weighted average remaining lease term is just inside two point five years. With respect to the stickiness of tenancy, we anticipate renewals will be elevated relative to our average portfolio wide renewal or retention. Engagement has been high with respect to our PM teams and the in place tenancy. And we anticipate that our execution will be at or above pro form a levels.

Eric Borden, Analyst, BMO Capital Markets: Okay. And last one for me if I may. Jeff in your prepared remarks, you mentioned that demand is broad based. I was hoping that you could comment on the development leasing at the 42,000 square foot Liberty Business Park development that’s currently underway?

Jeff Witherell, Chairman and Chief Executive Officer, Plymouth Industrial REIT: Yes. So we have a couple of full building users we’re negotiating with now. At 46,000 square feet, we want to basically get a full building user if we can. We still got a couple of months left. So I think we’re going to sign somebody up here fairly soon.

Eric Borden, Analyst, BMO Capital Markets: Thank you very much.

Conference Operator: Thank you. And the next question is from Nikita Bali from JPMorgan. Please go ahead.

Nikita Bali, Analyst, JPMorgan: Hey, good morning guys. Can you talk a little bit about the leasing activity and maybe specifically what’s driving that? It seems like you’ve had decent activity. What fundamentally what are your customers saying these days? I mean, it really more a function of them getting tired of all the headlines and the tariff news and people just moving on, which is kind of what we’ve been hearing this quarter?

Or is there something else that maybe is driving that?

Jim Connolly, Executive Vice President of Asset Management, Plymouth Industrial REIT: Yes. On the in the prepared comments, we did discuss that manufacturing firms are trying to solidify their space long term and maybe they think that there’s going to be significant increases down the road in rents. Also there’s a lot of 3PL activity. They’re working with us. Instance, like in Indianapolis, we’ve seen an uptick in 3PL activity.

We just signed a lease this week for 99,000 square feet that had been vacant. And we’re working with several 3PLs long term whenever they get searching for business, we’re like they come to us, they use our spaces there for their bids and this guy, he wants to extend it to some of our other buildings as well. So we’re doing the same in Columbus. We have a strong relationship with certain GPLs there and they’re using us for their bidding process and we’re using them to backfill our spaces.

Nikita Bali, Analyst, JPMorgan: And what are these TPLs are saying? Because we’ve heard interesting the opposite from some of the companies, for example, in California, right, the TPLs have been somewhat retrenching in the last couple of years. This seems to be the opposite of what do you think is driving that? Different markets I understand of course.

Jim Connolly, Executive Vice President of Asset Management, Plymouth Industrial REIT: Yes. I think in our case that there’s a lot of Class eight buildings on like in Indianapolis on the East Side outside of the city that are more expensive than our buildings. And I think our building and which is on the East Side, but more towards the central part of the city just offers a better cost structure. So it helps them win business.

Nikita Bali, Analyst, JPMorgan: And can you talk a little bit about the rents more at the market level? Like what are you seeing overall if you have maybe a prediction or guidance for 2025 in terms of the overall market rent? And how has that trended versus on a sequential basis, like 1Q versus 2Q and what are seeing in 2Q? Not specifically your portfolio, your rents, but the market rents where you guys participate and play around. Where are you seeing on a sequential basis with the market level rents there?

Jim Connolly, Executive Vice President of Asset Management, Plymouth Industrial REIT: Our market I’m going to answer for our market rents first. Our market rents have been growing maybe a little off pace from previous years except for the bigger box products, which has kind of muted our results. Like I think we show that if we backed out one property from our spreads, it’s basically close to where we were last year. And we’re seeing that across the board. It’s just the big box in a couple of locations.

It’s not just us, it’s everybody has had a level set their rent expectations because of the glut in bills that came up over the past year. So while that’s being absorbed, the rents have kind of flattened a bit on big box, but we’ll continue to grow once that space is full.

Nikita Bali, Analyst, JPMorgan: Got it. Maybe last one on the rent bumps. What kind of rent bumps are you guys achieving right now in all your new leases and renewals when you’re renegotiating those contracts versus what’s in place? Is that still higher? So we should expect the overall portfolio bumps to continue to trend up?

Jim Connolly, Executive Vice President of Asset Management, Plymouth Industrial REIT: Yes. We’re probably averaging 3.5% on that.

Nikita Bali, Analyst, JPMorgan: On new and renewals on the bumps?

Jim Connolly, Executive Vice President of Asset Management, Plymouth Industrial REIT: Yes.

Nikita Bali, Analyst, JPMorgan: Got it. Excellent. Thank you.

Conference Operator: The next question is from Brendan Lynch from Barclays. Please go ahead.

Brendan Lynch, Analyst, Barclays: Good morning. Thanks for taking my question. Jeff, can you talk a little bit about your capital allocation priorities over the next couple of quarters? Obviously, you’ve been very active on the acquisition front, recycling some capital, but there’s also been an uptick in share repurchases, kind of where that fits in your list of priorities?

Jeff Witherell, Chairman and Chief Executive Officer, Plymouth Industrial REIT: Sure, Brendan. I think as we mentioned, we have about $90,000,000 left to deploy whether that’s across acquisitions or share repurchases. The thing about share repurchase is that they take time. You can only buy so much of the average daily volume. So what we’re trying to do is look at acquisitions, look at the volume of the share repurchases.

And I think we’ve done a pretty good job of basically blending that as we go. But we will by the end of the year, will deploy that $90,000,000 I can’t say what the mix is going to be, but it will be similar to what you’ve seen in the past. So those are the two priorities right there.

Brendan Lynch, Analyst, Barclays: In terms of the acquisitions, how much left do you have in terms of ten thirty one Exchange Capital?

Anthony Saladino, President and Chief Financial Officer, Plymouth Industrial REIT: Well, not $10.31 exactly, but essentially deployment of the strategic capacity created by the Sixth Street transaction. There’s about as Jeff said about $91,000,000 left to deploy of the $500,000,000 that we announced at the time of the deal.

Brendan Lynch, Analyst, Barclays: Okay. Thank you. And then any update on the potential build to suit opportunities in Cincinnati or Memphis?

Jeff Witherell, Chairman and Chief Executive Officer, Plymouth Industrial REIT: Yes. So we have two well, we got more than that Brendan as you know, because several other pieces of land, some in Charlotte and Atlanta. But all of our parcels with our brokers, we have built to suit packages out there. As of today, there’s been very limited activity as you can imagine on new construction. But we continue to market it.

There continues to be some interest. And I think as this absorption starts to really picks up here as we get into next year, we feel confident that we’re going to find someone that and these are infill locations in Memphis, these are infill locations in Cincinnati. I mean, the Cincinnati is 200,000 square feet. It’s ready to go. It’s got high speed rail.

It’s owned heavy industry. So we think that space will go kind of as soon as some of this bigger box absorption happens.

Brendan Lynch, Analyst, Barclays: Okay, great. Thanks for the color.

Conference Operator: Thank you. And ladies and gentlemen, this concludes today’s question and answer session and thus concludes today’s call. We thank you for joining Plymouth Industrial REIT’s second quarter earnings call. You may now disconnect your lines.

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